Thorn Group Ltd (ASX: TGA)

TGA Details

Divergent experiences of two core businesses in FY17: Thorn Group recently announced the appointment of Mr Tim Luce as the new MD and CEO of the Company, effective on 1 March 2018. TGA has entered into a services agreement with Mr Luce which includes an up-front equity allocation in recognition of benefits foregone and provides alignment with shareholders. Given the challenges that the group faced last year, TGA simplified its business model to two core businesses (Consumer Leasing division and Business Finance division) after the sale of NCML and the run-down of the consumer loan book. The consumer leasing division, Radio Rentals, still faces challenges, while Business Finance division is a relatively small but fast-growing player. For the year ended 31 March 2017, Thorn Group reported NPAT growth of 26.17% to $25.3 million while revenue from ordinary activities were up 3% to about $299 million against last year despite the challenging environment. Further, return on equity was up 2 percentage points to 12.4%. 

NPAT Bridge (Source: Company Reports)

There was a surge in basic and diluted EPS to 16.38 cents compared to 13.1 cents last year. However, TGA declared final dividend of 2.5 cents that resulted in full year dividend of 8 cents which has been lower than 11.5 cents of last year. The outlook for FY18 is said to be subdued due to the immediate challenges being faced by Radio Rentals considering factors such as adverse publicity, weak retail market conditions, and business change from the roll out of the new online origination platform. On the other hand, Business Finance is expected to provide growth going forward. The stock has slipped about 6% in last three months, as at September 04, 2017. Given the mixed view and outlook, we maintain a “Hold” at the current market price of $ 1.20


TGA Daily Chart (Source: Thomson Reuters)

Pacific Smiles Group Ltd (ASX: PSQ)

PSQ Details

Growth at the back of new centres: Pacific Smiles, the Australian branded dental group, reported for a decent financial result at the back of growth from new dental centres and rise in patient fees. PSQ reported that for the full year ended 30 June 2017, revenue of $91.5 million was up 9.8% on the prior period while EBITDA (underlying) of $20.9 million was up 6.3% on the prior period. Group’s underlying NPAT of $10.3 million was up slightly by 1.3% on the prior period. The final dividend of 3.7 cps (fully franked) brought the full year dividends rising to 5.9 cps against FY16 figure of 5.5 cps. From business standpoint, patient fees generated by the dentists working at dental centres owned and operated by Pacific Smiles surged 9.8% to $147.0 million while same centre patient fees grew 3.8%. Among several business initiatives, PSQ opened 12 new dental centres comprising 11 Pacific Smiles Dental Centres and 1 nib Dental Care Centre, and has a total of 70 centres as at 30 June 2017. However, there was some impact from the losses from the accelerated new centre openings and the underperformance of the ex-DEP Centres (acquired in 2014 from Medibank Private) that led to a decline in EBITDA to Patient Fees margin from 14.7% in FY16 to 14.2% in FY17. Given the ongoing developments and business initiatives, EBITDA for FY18 is expected to be up 10% on prior year with total patient fee growth of 10% to 15%. The group also expects growth in overhead expenses with increased investment in training, IT and other enablers for network rollout. Meanwhile, new dental centres and a strong pipeline will proffer opportunities. The stock has risen 5.5% in last one month, as at September 04, 2017. We give a “Hold” at the current price of $ 1.87


PSQ Daily Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.